Gold has risen to new record highs in pounds and euros as concerns about contagion in the eurozone and stagflation in the UK deepen. The euro has fallen sharply in international markets and is down 1.5% against gold so far this morning. European Council President Herman Van Rompuy has called an emergency meeting of top officials dealing with the euro zone debt crisis as concerns deepen over the sovereign debt crisis spreading to Spain and Italy.

Gold in USD and Berkshire Hathaway A Class Shares in USD – January, 2000 until July 2010 (Daily- Rebased to 1)

Gold has risen to record nominal highs at EUR 1,100/oz, GBP 971/oz and at $1,549/oz is only a few dollars or some 0.5% from the record high close of $1,556.70 seen on April 29th. The very poor U.S. employment numbers Friday suggest that the very tentative U.S. recovery is tottering and a recession looks very likely which is leading to safe haven demand.

Gold has had another period of correction and consolidation and is looking well positioned to eke out further gains as we move into the seasonal strong Autumnal period which begins in August.

Cross Currency Table

Spain’s 10-year yield spread over Germany widened to a euro-era record of over 300 basis points. Italian and Portuguese bonds are also under pressure with Portuguese 10 year yields surging to 13.4%.

The risk of contagion affecting European and international banks and a new banking crisis rises by the day.

Meanwhile, in the U.S., President Obama is seeking a massive $4 trillion in a deficit reduction package. Failure to do so may lead to a U.S. and global sovereign debt crisis.

Jim Cramer Critiques Warren Buffett Over Anti Gold Bias

Jim Cramer, the host of "Mad Money" has critiqued the Sage of Omaha, Warren Buffett, and his anti gold bias. Buffett has said that gold isn't a sound long term investment because the precious metal has no ‘utility’.

Cramer says that he has heard from people saying they will not invest in gold since it was $700 per ounce because they “missed it” or because “someone like a Warren Buffett has said how valueless or silly it is”.

(GoldCore Editors note: George Soros cryptic comments about gold are similarly used by so called financial experts to dissuade people from owning gold)

“No one goes to Warren Buffett and says how have you done versus gold in the last 10 years. That is verboten. You are not allowed to ask him that.”

Cramer said that this “makes it very difficult to make headway with people” about owning gold.

While Buffett snubs the value of gold, Cramer emphasizes the limited amount of gold bullion available and gold’s rarity (see GoldNomics video), as well as the lack of new gold being mined. Cramer says that there is far less gold than there is Berkshire Hathaway B shares and that Buffett can just print the shares.

“Against all that is a grey beard investor who has already made a lot of money, who frankly could have his money devalued and still have a lot and I feel like … you know what Warren … give other people a chance to make some money here ok.”“Give other people a chance to protect their assets, give people a chance to buy insurance.”

“I would rather buy the insurance policy of gold than the insurance policy of Geico … pretty simple.” (to laughter)

“It is such a shame that he (Buffett) does that, I mean all he has to do is say that I don’t really understand it. “

“He did with Tech, like I saw when Intel was the equivalent of $2 and Microsoft was … before the big run. I understood … listen he said ‘I don’t understand tech’. That’s fine.”

He should say “I don’t understand gold”. He shouldn’t pick Keynes, who of course got the gold market wrong repeatedly. He should just actually say “I don’t understand it.”

“He would does us all … he is doing everyone a disservice by saying that it’s a beauty contest.”

Conclusion

Cramer is a divisive figure and liked and loathed by investors but these are excellent points about Buffett’s and Munger’s anti gold bias – points we have made previously.

Cramer’s assessment of Buffett and his lack of appreciation of gold as financial insurance and bias against gold is an accurate assessment.

Buffett deserves the title ‘Sage of Omaha’ and is to be respected but his failure to appreciate gold’s importance as a diversification in a portfolio and his repeated negativity towards gold (in contrast to his father Howard Buffett), will not be judged kindly in history.

It is never too late to do the right thing and to ensure his legacy Buffett should acknowledge gold has intrinsic value, has utility as money, as monetary asset, a finite currency and as financial insurance in a portfolio.

Gold continues to decouple from metrics that have dominated the price action in recent months: dollar up, oil down are no longer an issue. I suspect that trend will continue and pick up steam.

That's because gold is reclaiming its top-of-the-food-chain status in the face of full-on global currency uncertainty that, yes, even reaches the dear old dollar. US sovereign debt issues are now on full display and the politics are getting thick. An imminent rise in the debt ceiling comes at a badly timed juncture that only raises the specter of global competitive devaluations (and inflation). US unemployment has quashed any fears of a rate hike. And dollars may soon be spewing out of the fire hose as the new phase of the crisis unfolds

And there's also the sneaking suspicion of interbank liquidity drying up fast out there as numerous, interdependent global mega banks are falling into the shadowland of counterparty suspicion. Who will be the first domino? Will it be a Spanish bank? An Italian, Belgian or even a UK, French or German bank? Japan is imposing electricity rationing just as China has a failed debt auction.

Hang on to yer gold. If you don't have any, get it. If you have extra Bennie Bux, convert them. Gold will help navigate the choppy waters of the new unfolding reality which continues to go down the slippery slope anticipated since the crisis began in 2007.

Could be, but silver will hitch a ride all the same, certainly wont go in opposite direction to gold.
They can candy coat as many turds as they like and use whatever sprinkles to dress it up, fact is the good times are over.

All I know is that silver is consumed whereas gold is not. Silver suffers from its hermaphrodicity as an industrial and monetary metal (at times). If the numbers showing that 14 billion ounces of silver bullion in 1900 have now been consumed down to about a billion ounces of bullion are correct, then silver will have more days in the sun. I have days in which my 20% physical gold and overall 55% metal-related investments seem like the results of psychosis and days in which my psychosis wants me to get longer (and more physical). I may be the dupe sitting at the table or one of the visionaries; only time will tell.

Oh please...silver is not "consumed." Stop pumping...silver is being produced more than ever: see: mines of Mexico and Peru and elsewhere. Also, the silver in All electronics is recycled via the metal recyclers who strip it out of computers, et al. Gold and silver have significant problems: 1. They are enormously boring: put em in the ground, take 'em out. Rinse. Repeat.

My "money" is in those things that spin wonderfully...aka "investments" that create new things for our culture and planet and make our lives better. Gold and silver sit there. And sit there. And sit there.

Americans put tons of electronics into luxury landfills each year - they don't have the same Rubbish Nazi regimes that Europe does, and they aren't as poor (yet) as the developing world. Electronics is also only a portion of industrial demand (batteries are more problematic).

IF YOU WANT TO RECOVER SILVER FROM ELECTRONICS:

The best technology, with high recovery rates, no chemical inputs, no toxic outputs, and minimal CO2 production- comes from Switzerland- so buy it before it becomes the CHF makes it unaffordable.

Gold would be used by many manufacturers if it were at a price that made it economically feasible. It is used in many high-value instances in electronics (and is usually touted as such "gold plated contacts", etc.). If it were as common, and priced, as silver it would be used extensively.

It is incorrect to say that it has no utility, whereas, it would be more accurate to say that it's too costly to use in common applications.

The story I heard is that he bought 120 million ounces in the late 90s, then wrote covered calls against it for years before finally being caught out in a rally and forced to sell (sometime in the mid-2000s). Very profitable business model. At any rate, the story goes that his hoard is in other hands now.

Maybe. But if the alternative is playing chicken/limbo with the imploding Euro, what choice is there? Stealth printing is one thing, but swapping out the $100 plates for $10000 would crash the whole complex instantly.

It is very hard to criticize Buffet's investing decisions. The results speak for themselves. However, lets be thankful that he doesn't want gold. Just imagine what he could do to the price of gold if he truely wanted to hoard it. I cannot afford shares of Berkshire, but I for one will continue buying gold, silver while I still can.

Countries do that too. Sell off publicly, accumulate quietly. You don't want to have everyone front-running you, for one thing. Shoot, why not announce that you're actually selling and push down the market a bit before you scoop it up (like Soros).

The Chinese and Russians are the masters. They buy up the production of their domestic mines, so the metal never registers on market radar.

Warren Buffet has a self-serving bias towards currency. He couldn't get out of his positions denominated in fiat currency if he wanted to. He's trapped. And if media darling, Buffet, started buying gold right now it would start a stampede.

Buffet's father was a congressman who was an avid gold-bakced currency supporter. Tragically, Warren was dropped on his head as a child and lost his integrity gene.

"I warn you that politicians of both parties will oppose the restoration of gold, although they may outwardly seemingly favor it, unless you are willing to surrender your children and your country to galloping inflation, war and slavery then this cause demands your support. For if human liberty is to survive in America, we must win the battle to restore honest money. There is no more important challenge facing us than this issue — the restoration of your freedom to secure gold in exchange for the fruits of your labors." --- Howard Buffet, in speech to congress, 1940's

GM all. Well, is this really any surprise to long term ZH folks here? Not much to say. This puzzle is taking shape and looking just about right. Glad they are moving into American confetti, wow, that is smart. We are in line with the rest, just in the back, and will take time to get to the front of the line.

What a day for gold to hit an all time high. Anyone see the "brillant ones" lately.

A very remarkable thing has happened under the radar: since the crisis began for real in 2008, more average Joes/Janes bought gold than at any time since the gold standard existed in the United States. (!)

It was a side-effect of greater financial transparency, the public's riveted attention since the spooky days of the housing crash and the Wall Street crash in 2008, incessant trawling for scrap gold out there on the streets and in malls and on TV, tireless marketing of gold investments on the internet and media.......AND open discussion forums about gold and the issues surrounding gold right here on ZH! (and other well-known sites)

ZH has done a public service by helping countless citizens protect themselves from the poisonous side-effects of Ponzi economics.

There is no doubt that between the USA, China and Europe, there is little love between them. However, if one goes down the others will follow. Therefore, at some point they may well agree to at least stem the rise of gold through whatever means possible until they figure out (unsuccessfully) how to prop up the fiat facade for the sake of keeping power, position and wealth in the hands of their elite. The bankers and their friends love shaking the gold bugs' tree even though they themselves are sinking.

I stand by the statement: gold is non-yielding because it has no counterparty risk.

We may agree on one thing: if a medium of barter pays a dividend/yield/coupon it is not "sound" money, but rather a derivative of money, or a credit if you will. But you don't get something for nothing:

LEASING=======Nice idea, but if you lease "it" out (gold, silver, shares, a house, a car, etc), you take on counterparty risk. Who are you leasing to? For what duration? On what terms? There are market lease rates for gold, silver and so on. We can go on and say, palladium has a dividend because I can lease it out, sure I can, but how do you reconcile for the fact that you may not get it back with saying that there is no counterparty risk, well, it can't be. There are no risk free rates.

COLLATERALIZATION=================Possibly, but if you use it as a fractional reserve asset, it is not unencumbered. There is someone else who has a claim on it. And by that time, it is not truly "your" asset. There was an article on ZH a while ago with a presentation of the "implied yield" of gold, as it can be posted as collateral. This is the closest we can get to a "dividend" of gold, but ultimately gold is non-yielding as such collateralization implies that the gold is encumbered by someone else's claim to it. You may not obtain this implied yield unless you take on whatever risks that such collateralization implies. I suppose this risk has a fancy name as well.

COVERED CALL===========The axiom Gold + other asset (in this case selling a call option) = synthetic dividend does not invalidate that gold has no yield. The premium of the written option is not a yield of the asset and as a seller of a derivative you take on multiple types of risk (the Greeks). Holding the underlying asset, e.g. Au, alters the payoff curve but once we go into the options space then anything is possible.

Buffet deserves the title Fascist of Omaha for his record of bribery and theft of the American people .Bribing those in office that control the printer would allow any fascist to infect good companies and leech off the labor and management . Behind every Buffet deal is a dirty politician . Fascist theif vs Capitalist risk investor .

Armed with a list of folks that own physical PM's, I decided to use my unsecured credit to buy Guns, Ammo, Food, and Fuel. So, If nothing happens, my Guns, Ammo and Fuel will ALWAYS be worth what I paid today, (I can eat the food), and if we go apocolypto I can acquire as much PM's as I choose, when I choose, where I choose and how I choose.

They are completely right, in the long term you have to have a negative gold bias on average.

The rolling lowest Price/Book decile of the S&P500 outperforms the highest with 10% over the last century. Returns are 22+% for the lowest, 5% for the highest (growth stock).

Make an adjustment for ('real', 'uncensored') inflation on let's say 8% and gold is underperforming stocks except when buying moron highest deciles growth stock. Since S&P500 is market cap-weighted dominated by growth stock, people don't see how fast non-moron stocks go up because they look at the S&P. Read an empirical finance book on value investing